Sutlej Textiles Q2FY15 net profit slips 30%
Net profit for the second fiscal quarter ending September 30, 2014, slipped 30.2% year-on-year at value-added yarns and home textile producer - Sutlej Textiles and Industries Ltd (STIL).
In the second quarter of fiscal 2014-15, profit after tax tumbled to Rs. 30 crore as against Rs. 43 crore in the corresponding quarter of fiscal 2013-14, down 30.2%.
According to Chairman, CS Nopany, its strategy of focusing on niche value added products has helped STIL reduce the impact of the challenges faced by the sector, during the quarter.
Revenues for the reporting quarter too declined, however slower by 6.7% to Rs. 459 crore compared to Rs. 492 crore during the second quarter of fiscal 2013-14.
STIL said topline performance during the quarter moderated, due to sluggish demand primarily on account of falling raw material rates.
EBITDA for the quarter under review stood at Rs. 68 crore, was also down from Rs. 84 crore, from a year earlier quarter.
“Margins remained under pressure in the second quarter, which affected operating profit”, STIL explained.
“Going ahead, addition of yarn and home textiles capacity and improvement in product-mix, should help us deliver sustainable performance in the long term,” the Chairman added.
During the quarter, STIL has started commercial production of its expansion project of 31,104 spindles, at Chenab Textile Mills in J&K, which is one of its units.
It said its total yarn spinning capacity now stands at 292,840 spindles, of which 96,720 spindles are utilized to make cotton mélange and cotton blended dyed yarn.
STIL expects that the addition of the new capacity will enable it to further strengthen its position as a leading player in the niche cotton mélange and cotton blended dyed yarn segment.
STIL which has invested Rs. 25 crore as on September 30, 2014, towards technology up-gradation and debottlenecking, etc, expects that the same shall lead to increase in efficiency and cost reduction.
On completion of the ongoing expansion at one of its units - Damanganga Home Textiles, capacity will increase to 9.6 million metres per annum from the present 2.5 million metres.
“Increased presence in home textile segment will result in further strengthening of end to end operations – yarn to home textile,” STIL stated.
STIL said it is shutting down its fabric division situated in Gujarat, in view of its unviable operations in line with STIL’s strategy of focusing on profitable business ventures.
STIL issued Commercial Paper (CP) worth Rs. 60 crore in two tranches, for which it received a rating of CARE A1+ from Credit Analysis & Research Limited (CARE).
The proceeds of the CP will be utilized to substitute working capital requirement, thereby enabling STIL to save on interest cost.
STIL informed that it has been selected for ‘Niryat Shree – Bronze Trophy’ award to be presented by the President of India on December 1, 2014. (AR)
Fibre2fashion News Desk - India